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Career prospects in Islamic finance in the UK

Summary

There is a limited need for Islamic finance specialists in the UK.

Experience for these careers generally needs to be acquired in the conventional finance industry.

11 November 2013

The organisation Simply Sharia recently asked me if I would contribute a chapter on Islamic finance careers in the UK for a publication "Islamic Finance - The Human Capital Challenge 2013 - Practitioner Insights" which they were publishing to coincide with the World Islamic Economic Forum being held in London. I readily agreed and contributed the piece below.

You can download the full report from the Simply Sharia website but will need to register which is free.

BRITAIN: Finding a career path in Islamic Finance

Mohammed Amin is an Islamic finance consultant, who graduated in Mathematics from Cambridge University. He is also a chartered accountant, a chartered tax advisor and a qualified corporate treasurer. Before retiring, Amin was a tax partner in PricewaterhouseCoopers LLP and led PwC’s Islamic Finance practice in the UK. Amin regularly contributes articles and book chapters to a range of professional and industry publications and writes about Islamic finance on his personal website He has presented on Islamic finance in over 20 cities outside the UK.

As a frequent speaker on Islamic finance and a former tax partner with PricewaterhouseCoopers LLP leading PwC’s Islamic Finance practice in the UK, I am often approached by Muslim students or recent graduates wanting advice on how to pursue a career in Islamic finance. There are two main questions that need to be addressed to be able to advise young professionals wanting to enter this sphere:

How realistic is a career in Islamic finance for UK professionals?

How can young people maximise their chances?

The global growth potential

Three key statistics suggest Islamic finance (IF) is a robust industry that will continue to grow strongly for the foreseeable future:

Accordingly, Islamic finance assets represent about 0.7% of global financial assets, despite Muslims constituting about 23% of the global population. The wide divergence between these two percentages is due to relative Muslim / non-Muslim wealth levels and also the reality that many Muslims do utilise conventional finance. However changes in both factors have propelled the growth of Islamic finance over the years and I expect this trend to continue as Muslims become richer and their readiness to use conventional finance diminishes.

Where will the jobs be?

Retail financial services are almost always delivered from within the countries where the customers are located. The reason is a combination of practicality and protectionism by national regulators. Even within the European Union, which has taken many measures to facilitate the cross-border provision of financial services, most citizens bank and insure with providers located in their own country.

Accordingly, most future jobs in Islamic finance will be located where most of the Muslims are, in Muslim majority countries.

However some financial services, primarily at a wholesale or corporate level, are delivered internationally. In conventional finance, London acts as a centre for international banking, insurance, derivatives trading, and FX trading as well as many other similar sectors. If the London based financial services industry served only UK based end customers, it would be a small fraction of its present size. The same logic applies within Islamic finance, which is why four of the five purely Islamic banks in the UK are investment banks located in London but serving international markets. Only one UK based Islamic bank, the Islamic Bank of Britain plc (IBB), targets UK retail customers and chose to locate in Birmingham.

The size of the UK Islamic finance job market

A realistic approach is needed to understand and identify the Islamic finance employment opportunities in the UK. As a starting point and because the data is readily available, we can look at the stand-alone Islamic banks, which are listed below ranked by number of employees as of 31st December 2012 - the last date for which they published full accounts.

Bank

Headcount

Islamic Bank of Britain

118

Bank of London and the Middle East

86

European Islamic Investment Bank

84

Gatehouse Bank

38

QIB (UK)

31

Total

357

The above figures represent the total headcount of these banks. When the banks were newly established they were building up staffing levels, but several years ago they reached their target size, and their staff levels have since been on a plateau. The accounts do not disclose staff turnover but if for example staff turnover is 10% then the institutions would only need to recruit a total of 36 people a year between them. As well as the stand-alone Islamic banks, the UK Islamic finance industry also employs a significant number of people in "window" operations (Lloyds Bank and Barclays) and in the structured Islamic finance desks of investment banks. No headcount data is available. Even if including such operations were to triple the total headcount, the total would still only amount to around 1,000 bank employees with perhaps 100 being replaced each year, often by recruitment from within the organisation.

To the bank employee numbers above, we can also add jobs in other financial services sectors such as insurance, asset management, and service providers such as lawyers, accountants, actuaries etc. However the overall conclusion is that the number of employment opportunities in UK Islamic finance is quite limited though not absent.

The need for specialisation

Students often seek a career in Islamic finance without realising that there is no such thing as a generic “job in Islamic finance” just as there is no such thing as a generic conventional finance job.

Financial services firms (whether conventional or Islamic) employ specialists. Apart from Shariah experts who are required only by the Islamic finance industry, the other categories listed below are required by both Islamic and conventional finance firms.

Shariah experts

Lending officers

Internal auditors

Regulatory specialists

Risk specialists

IT specialists

Acquiring specialist skills

Some of the skills can be acquired by choosing appropriate university subjects or by obtaining professional qualifications such as becoming a chartered accountant. However the most relevant training and experience to become a banker can only be gained by working for a conventional bank, either as part of its graduate trainee programme or later on in a specialist role such as working on its equipment leasing desk.

Unlike UK conventional banks, the UK Islamic banks are too small to offer graduate training programs, which take new graduates and develop them into bankers. Instead their business model relies upon recruiting people who already have the skills that the bank needs. Retraining a conventional banker to work in an Islamic bank is relatively straightforward, unlike teaching a new graduate how be a banker, whether Islamic or conventional.

Some Muslims hold religious views which preclude them working in a conventional bank. Their views are of course a matter for them to decide for themselves. However, unless someone has other relevant specialist qualifications such as being a chartered accountant, they will be unlikely to acquire the specialist skills that would make them employable by an Islamic bank in the UK. The same logic applies to someone who wishes to become a specialist in Takaful (Islamic insurance), Islamic asset management or other sectors of the Islamic financial services industry. Furthermore, even training as a chartered accountant who has a financial services industry specialism entails providing services to conventional financial institutions, for example being part of audit teams auditing conventional banks. There is insufficient Islamic bank auditing work in the UK for trainee bank auditors to gain adequate experience through purely auditing Islamic banks. Therefore those individuals whose religious views preclude them from auditing conventional banks will not be able to learn within the UK how to audit banks. This is certainly an issue for pause for some people wanting to enter IF.

Gaining experience abroad

The training situation is quite different in the Islamic financial services industry in places such as Malaysia and the GCC countries. Islamic finance in Muslim majority regions like the GCC and Malaysia has sufficient scale to be able to take on new graduates and train them to be bankers.

However UK based graduates without existing experience will struggle to compete effectively against local graduates for such jobs. In particular, language skills and the absence of local cultural knowledge are likely to be a barrier, in addition to national employment regulations that often discriminate in favour of local employees.

The future in Islamic finance careers

Currently there are some career opportunities for Islamic finance practitioners in the UK, but they are few in number. Entering the UK Islamic finance industry requires the individual to already possess the skills and experience that employers require. In practice, in the UK such skills can only be gained by working in conventional banks or providing services to conventional banks and financial institutions. Those graduates whose religious beliefs preclude them working in conventional banks or providing services to conventional banks will need to compete for training programmes opportunities abroad or seek a career outside Islamic finance.

However as the industry grows, strengthens its infrastructure and engages with a wider audience, we will see the development of human capital becoming a vital part in the need to advance its activity and create jobs. The UK can be a pivotal part of that growth through exporting training and education, providing competently qualified professionals and helping to create a detailed time-specific action plan, which takes a holistic approach to the IF job market.

Return to top from Endnote 3 Estimate of $1.289 trillion at the end of 2011 in “Islamic Finance” published in March 2012 by the UK Islamic Finance Secretariat. I have uplifted that figure by 15% which for many years has been the average growth rate for Islamic finance to ensure that the conventional and Islamic figures are taken at comparable dates.

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